Market analysts have been predicting a market correction for some time, noting that drops of 10 per cent or more are common during bull markets.

The stock market had been relatively calm for more than a year — with the combination of economic growth in the US and other major economies, plus low interest rates.

This meant stocks were able to keep rising steadily without a lot of bumps along the way.

But experts have warned this would not last forever.

"It's like a kid at a child's party who, after an afternoon of cake and ice cream, eats one more cookie and that puts them over the edge," said David Kelly, the chief global strategist for JPMorgan Asset Management.

Mr Kelly said the signs of inflation and rising rates are not as bad as they looked, but after the market's big gains in 2017 and early-2018, stocks were overdue for a drop.

Worst stocks

Every S&P sector was smashed, with financials (-4.7pc), healthcare (-4.6pc), industrials (-4.5pc) and energy (-4.3pc) being the worst performers.

The sectors with the least losses were utilities and consumer cyclicals, which dropped 1.7 and 3.3 per cent respectively.

The big banks Citigroup, Goldman Sachs and Bank of America have dropped by up to 2.5 per cent each.

But it was Wells Fargo which fell the hardest — falling by 9.2 per cent, making it the weakest of the 500 stocks in the S&P index.

This was after the Federal Reserve forced Wells Fargo to replace four directors. In addition, the Fed is restricting the bank from getting any larger or richer until its "widespread consumer abuses" are addressed.